The boardroom at Megawatt Park was, for once, not filled with the anxious energy of crisis. No emergency meetings had been called. No urgent appeals had been issued to the National Treasury. No one was calculating the precise number of hours of load-shedding that could be avoided if diesel deliveries arrived ahead of schedule. The men and women seated around the polished mahogany table were, improbably, reviewing financial projections that suggested South Africa’s perennial crisis entity was, against all odds, making money.
R15 billion. That was the forecast. Not in revenue—Eskom has always generated substantial revenue. In profit. Actual, auditable, retained earnings. The kind of number that appears in the black column of a balance sheet and causes international credit rating agencies to reconsider their longstanding skepticism.
“It is too early to declare victory,” cautioned the group executive for finance, her tone carefully modulated to suppress any appearance of triumphalism. “One positive year does not erase two decades of structural deficit. The debt remains substantial. The challenges remain significant.”
But even she could not entirely suppress the small, involuntary movement at the corner of her mouth that resembled, if one were feeling generous, the beginning of a smile.
The Anatomy of a Turnaround
To understand how Eskom arrived at this improbable juncture, one must first understand the depths from which it has emerged. In the 2022/23 financial year, the utility was losing approximately R1 billion per month. Its debt had ballooned to R423 billion, a figure so vast it had ceased to be comprehensible in human terms. Load-shedding had reached unprecedented levels, with some days seeing South Africans spend twelve hours or more without electricity. Coal-fired power stations, many of them operating well beyond their design lives, were breaking down with the regularity of a chronic illness.
The turnaround, when it came, was not the product of a single dramatic intervention. It was, instead, the accumulated effect of dozens of incremental improvements, each insufficient in isolation but collectively transformative.
Plant performance improved. The much-maligned energy availability factor—the proportion of installed generating capacity actually available to produce electricity—crept upward from the catastrophic lows of 48% to a still-modest but markedly improved 62%. Maintenance backlogs, accumulated over years of deferred investment, were gradually addressed. The new leadership, appointed with a mandate that was simultaneously political and technical, implemented what one insider described as “boring management”: shift scheduling, spare parts inventory, contractor accountability.
“The miracle of Eskom,” said energy analyst Chris Yelland, “is not that it has suddenly become efficient. It is that it has become slightly less inefficient, and that is sufficient to produce dramatic financial improvements when combined with favourable external conditions.”
Those favourable conditions included lower international diesel prices, which reduced the cost of operating the open-cycle gas turbines that Eskom deploys during peak demand periods. They included tariff increases approved by NERSA that, while politically contentious, brought electricity prices closer to cost-reflective levels. And they included, perhaps most significantly, a gradual stabilization of the coal supply chain that had been disrupted by trucking industry dynamics and Transnet’s logistical difficulties.
The First Half Surprise
The interim results, released in November 2025, had stunned even the most optimistic analysts. Eskom reported a profit after tax of R24.3 billion for the first six months of the financial year—a 37% increase over the already-improved performance of the previous year’s first half.
The market reacted with cautious enthusiasm. Bond yields tightened. The rand strengthened marginally. International investors, who had spent the better part of a decade avoiding exposure to South African state-owned enterprises, began making tentative inquiries.
“These numbers are not a fluke,” said Lumkile Mondi, an economist at the University of the Witwatersrand. “They reflect genuine operational improvements and a pricing environment that finally allows Eskom to recover its costs. The question is whether they are sustainable.”
The sustainability question hinges on several variables, none entirely within Eskom’s control. Coal quality remains inconsistent, with some power stations receiving fuel that does not meet their design specifications. Transnet’s rail performance, critical for moving coal from mines to power stations, remains unreliable. And the political environment, which had provided Eskom’s leadership with unprecedented operational autonomy, remained subject to the unpredictable currents of coalition governance.
The Diesel Dividend
Perhaps the single largest contributor to Eskom’s improved financial position was the dramatic reduction in diesel expenditure. At the height of the load-shedding crisis, Eskom was burning approximately R3 billion worth of diesel per month—a rate of consumption that was both environmentally catastrophic and financially unsustainable.
The open-cycle gas turbines, designed to operate for limited periods during peak demand or emergency conditions, had been running continuously for months. Each hour of operation consumed fuel at a cost that far exceeded the revenue generated from the electricity produced. It was, as one former Eskom executive memorably described it, “the functional equivalent of burning R100 notes to generate R60 worth of electricity.”
The improvement in baseload plant performance reduced reliance on these expensive peaking plants. By early 2025, diesel consumption had fallen by more than 60% from its crisis peak. The savings flowed directly to the bottom line.
“We are not out of the woods,” cautioned Bheki Nxumalo, Eskom’s group executive for generation. “Our coal fleet remains old and unreliable. We continue to experience unplanned breakdowns at rates that would be unacceptable in any properly functioning utility. But we have stabilized the patient. The hemorrhaging has stopped.”
The Tariff Tightrope
The tariff increases that contributed to Eskom’s improved financial position were, predictably, the subject of intense political controversy. The National Energy Regulator of South Africa had approved annual increases averaging 12.7% over the three-year period ending March 2026—significantly above inflation, significantly above wage settlements, significantly above the rate at which household incomes were growing.
For residential consumers, particularly those in lower-income brackets, the cumulative impact had been severe. A household that spent R800 per month on electricity in 2022 was now spending approximately R1,150 for the same consumption. Small businesses, which operate on thin margins and cannot absorb such increases, had responded by reducing staff hours or, in some cases, closing entirely.
“The tariff increases were necessary,” acknowledged Thabisa Mangwana, an energy policy researcher at the Public Affairs Research Institute. “Eskom cannot operate indefinitely at a loss. But the burden of adjustment has fallen disproportionately on ordinary South Africans. There has been no corresponding effort to require large industrial consumers to pay their fair share, or to implement progressive block tariffs that protect the poor while charging the wealthy cost-reflective rates.”
Eskom’s leadership defended the tariff trajectory as both necessary and, in comparative terms, moderate. “South African electricity remains among the most affordable in the world,” a briefing document noted. “Our industrial tariffs are competitive with those of our major trading partners. The adjustments we have implemented are designed to achieve cost recovery, not to generate supernormal profits.”
The Debt Overhang
For all the optimism generated by the R15 billion profit projection, the figure must be contextualized against Eskom’s accumulated debt burden. The utility’s total debt stood at approximately R380 billion at the end of 2025—reduced from its peak of R423 billion, but still representing an obligation that will require decades of disciplined financial management to discharge.
The R15 billion profit, if realized and retained, would represent less than 4% of this outstanding debt. At current repayment rates, assuming no further borrowing and stable financial performance, Eskom would require approximately twenty-five years to achieve debt-free status.
“That timeline is not realistic,” acknowledged a senior Treasury official who spoke on condition of anonymity. “Eskom will continue to require capital investment, which will necessitate continued borrowing. The objective is not to eliminate debt entirely—that would be neither feasible nor desirable. The objective is to achieve a sustainable debt trajectory, where borrowing is for investment rather than to cover operating losses.”
The official paused. “We are not there yet. But we are closer than we were.”
The Maintenance Challenge
The improved plant performance that underpinned Eskom’s financial turnaround came at a cost. The maintenance backlog, accumulated over years of deferred investment, required sustained expenditure on both human and material resources. Eskom had recruited aggressively, hiring experienced engineers and artisans to replace the cohort that had departed during the years of crisis and mismanagement. It had replenished spare parts inventories that had been depleted to dangerously low levels. It had contracted with original equipment manufacturers to provide technical support that had previously been attempted, unsuccessfully, in-house.
These investments produced results. The frequency of unplanned breakdowns declined. The duration of planned maintenance outages shortened. The reliability of individual generating units improved.
But the fundamental challenge remained unchanged. The average age of Eskom’s coal-fired power stations is 41 years. These facilities were designed for operational lifespans of approximately 30 years. Every year they continue to operate represents borrowed time—time borrowed against the eventual necessity of decommissioning and replacement.
“We are performing heroic feats of maintenance,” said an engineer at the Kusile power station, one of Eskom’s newer facilities. “But heroism is not a strategy. We cannot maintain our way to sustainability indefinitely. At some point, we must build new capacity to replace the old.”
The Transition Tension
That new capacity is, increasingly, not coal. Eskom’s generation fleet is undergoing a gradual but inexorable transformation. The utility has embraced renewable energy with an enthusiasm that would have been unthinkable a decade ago, when coal was considered the only legitimate foundation of South Africa’s electricity system.
Solar photovoltaic installations now dot the landscape around existing power stations, feeding clean energy into the grid during daylight hours. Wind farms in the Eastern Cape and Northern Cape contribute increasing volumes of electricity. Battery storage systems, still limited in capacity, are being deployed to address the intermittency challenges that accompany renewable generation.
The transition is not without tension. Coal-dependent communities, particularly in Mpumalanga, face an uncertain future as mines close and power stations reach the end of their operational lives. The utility has established a Just Energy Transition office, staffed with dedicated personnel, but the scale of the challenge is daunting. Entire towns—Ermelo, Hendrina, Kriel—were built around the coal economy. Their post-coal future remains undefined.
“There is no blueprint for this,” admitted Mandy Rambharos, who led Eskom’s Just Energy Transition planning before departing for an international climate finance role. “No country has attempted to transition an economy of South Africa’s size and complexity away from coal at this pace. We are building the airplane while flying it.”
The Consumer Conundrum
For all the positive financial indicators, Eskom remains acutely vulnerable to the economic health of its customer base. South African households and businesses, squeezed by high interest rates, elevated inflation, and sluggish growth, have limited capacity to absorb continued tariff increases.
Electricity consumption has not recovered to pre-load-shedding levels. Some of this reduction reflects genuine efficiency gains—LED lighting, inverter air conditioners, improved industrial processes. But much of it reflects something more troubling: economic contraction. Factories operating reduced shifts. Mines placed on care and maintenance. Office buildings standing vacant.
“We are caught in a feedback loop,” said energy economist Elena Dugard. “Eskom needs higher tariffs to achieve financial sustainability. Higher tariffs suppress economic activity. Suppressed economic activity reduces electricity demand. Reduced demand necessitates further tariff increases to recover fixed costs. The loop continues.”
The loop is not infinite. At some point, the cumulative burden of electricity costs becomes unsustainable for consumers, who respond by investing in self-generation and reducing their grid reliance. This dynamic, already evident among large industrial customers and affluent households, threatens to undermine Eskom’s business model by removing its highest-margin customers from the customer base.
“We see it in the data,” an Eskom pricing specialist acknowledged. “Networks are experiencing declining throughput. The customers who can afford to leave the grid are doing so. Those who remain are those who cannot afford alternative arrangements. This is not a sustainable trajectory.”
The Political Calculus
The Government of National Unity, in which Eskom’s political oversight is distributed across multiple parties with divergent ideological orientations, has maintained an uneasy consensus on the utility’s turnaround strategy. The consensus rests on a shared recognition that Eskom’s collapse is not acceptable to any constituency, combined with persistent disagreement about the appropriate long-term structure of the electricity industry.
The Energy Action Plan, announced with considerable fanfare in 2022 and periodically updated since, has provided a framework for technical interventions while deferring the most contentious political decisions. The transmission company has been legally separated from the generation and distribution entities, a first step toward the unbundling that was recommended by numerous commissions and expert panels. The distribution function, long identified as a site of particular dysfunction and financial leakage, remains mired in complex negotiations with municipalities that depend on electricity surpluses to cross-subsidize other services.
“The politics of electricity are the politics of everything,” observed a senior government official. “Every decision about Eskom is a decision about employment, about industrial policy, about regional development, about climate change, about intergovernmental relations. There is no purely technical solution because there is no purely technical problem.”
The Winter Test
As the 2026 financial year approaches its conclusion, Eskom’s leadership is acutely conscious that the utility’s improved financial position remains contingent on continued operational stability. The winter of 2026, now approximately four months distant, will subject the generation fleet to its annual peak demand period. Unusually cold conditions, combined with any significant deterioration in plant performance, could rapidly reverse the accumulated gains.
“We do not take stability for granted,” said the group executive for generation. “We have learned, through bitter experience, that Eskom’s condition can deteriorate with alarming speed. The maintenance we perform today is an investment in reliability six months from now. We cannot afford to become complacent.”
Contingency plans have been updated. Diesel reserves have been prepositioned. Critical spares have been stockpiled. The human resources required to respond to unplanned outages have been identified and trained.
But the fundamental vulnerability remains. South Africa has not constructed a new major baseload power station in more than a decade. The demand for electricity continues to grow, slowly but inexorably, as the economy recovers and previously unserved households are connected to the grid. The margin between available capacity and peak demand remains uncomfortably narrow.
The Long View
Standing at the window of his Megawatt Park office, looking out across the Johannesburg skyline, the Eskom chief executive allowed himself a moment of reflection. He had inherited an organization on the brink of collapse. He had implemented reforms that were painful, controversial, and deeply unpopular with some of the utility’s traditional stakeholders. He had survived multiple attempts to remove him, mounted by interests that preferred the profitable chaos of crisis to the uncertain discipline of recovery.
His contract would expire in 2027. He had not decided whether to seek renewal. The work was consuming. The criticism was relentless. The responsibility was, at times, almost unbearable.
But today, looking at the financial projections that forecast R15 billion in profit, he allowed himself to acknowledge what his subordinates could not: the patient was not merely stabilized. The patient was, slowly and painfully and incompletely, recovering.
“The lights are on,” he said quietly. “That is not nothing.”
It was, in fact, something quite significant. After years of darkness, after years of crisis, after years of watching the country’s economic potential drain away through the sieve of an unmanageable utility, the lights were on. Not reliably, not permanently, not at a cost that was affordable for everyone. But on.
The question—the question that would occupy Eskom’s leadership for the foreseeable future—was whether they could keep them that way. The R15 billion profit projection suggested that the answer might, for the first time in many years, be yes.
The winter would test that hypothesis. The political environment would test it. The accumulated debt would test it. The aging fleet would test it. The transition to renewable energy would test it.
But for now, in this moment, the numbers were black. The forecast was positive. The lights were on.
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